TomorrowMakers

If you are a liquid buyer with deep pockets, the current pandemic offers a huge opportunity for real estate as a safe haven for investment. As a woman buyer, you have it even better! Here is how you can benefit from tax rebates offered by the government.

Why is real estate a safe investment bet during COVID-19

During the pandemic caused by COVID-19, it is essential to keep your core investment strategies in mind. It is also important to gauge your risk appetite before you begin investing. The impact of the pandemic has been stifling, as it affected real estate transactions during the two COVID-19 waves that impacted India.

As the infection rate slowed down and the virus-induced lockdown restrictions were eased, the real estate industry took strides towards a gradual recovery. The reason? People came to realise the value of having their own home. The uncertainties of the past year taught them the importance of owning property and made them shed the wait-and-watch approach.

Why do you need to invest?

Given that we all faced uncertain times during the pandemic, it is prudent to invest the money you have and keep it aside as contingency funds. If you have a steady flow of income and a stash of funds kept aside for your needs, it may be the best time to start investing. Remember, what you put aside as investment today will add to your wealth and financial growth. This way, you can tide over future uncertainties. 

Is real estate a good investment?

Considering the long-term resilience of real estate, investing in it appears to be a good option and a safe haven asset in the current scenario. The confidence was seconded by the vaccination drive rolled out by the government. However, a subsequent upsurge in virus infections compelled the investing community to remain cautious.

With home-buying enquiries and virtual site visits, it appears that the real estate market will soon go back to pre-COVID levels in several cities. Investment in residential property, co-working spaces, warehouses, and self-storage can be a good option in the ongoing scenario.

Go back to basics: Given the uncertainty currently prevailing in the market, diversifying your portfolio towards real estate investment can be a good option. It is safer vis-à-vis other investment avenues such as the stock market. An alternative asset like real estate can protect your money from erosion in these tough times and give you the satisfaction of owning a tangible asset.

Aim for smaller cities: As smaller cities are less densely populated and reported fewer cases of Coronavirus during both waves, investing in real estate in these cities is expected to produce better returns in the long run. However, before you go ahead, do collect information about the developer’s past performance, market demand, and the intrinsic value of the asset.

Get expert advice: It is always better to consult a real estate expert or asset manager before you invest your hard-earned money. These consultants, with their financial and real estate expertise, can assist in developing the best strategy for you to preserve your cash flow and position yourself better to take the right action, as and when the right opportunities arise.

Watch for distress sales: The ongoing COVID-19 crisis caught the market off-guard. Hence, it offers great potential for investors who wish to take advantage of the distressed real estate assets in the market, which have been devalued by the current downturn. This presents a good investing opportunity for buyers who can expect to make gains once the economy recovers.

Look at REITs: Real estate investment trusts (REITs) are directly dependent on rent-generating real estate assets. More and more REITs are likely to get listed on the markets this year, with the real estate market expected to enter an era of prolonged growth. As a result, the number of buyers and sellers will broaden, increasing market liquidity over time.

Stay informed: You need a good understanding of how the real market works, so do your research. Stay well-informed about the changes happening in the marketplace and understand why they happen. Before you take the plunge, do your own study and a comparative analysis of different projects before choosing one that suits your investment profile.

What women home buyers should know about?

The security of a physical asset influences women homebuyers, especially after COVID-19. This is also supported by the key drivers of affordability, discounts, and cheaper home loans. Real estate is considered not just as a bedrock of financial security, but is also essential to diversify one’s investment portfolio. 

Various government policies that promote home ownership for women. To avail of a home under the Pradhan Mantri Awas Yojana, introduced in 2015, the home has to be mandatorily registered in a woman’s name, or with a woman as co-owner. The aim is to empower women in the lower income segments. 

As a woman, you can invest in real estate for your own use or for the purpose of investment, by taking advantage of some good benefits offered by the government.

Related: What investment options can create a regular income for women?

Exploring women-friendly schemes

  • Several financial institutions offer discounted home loan rates to women. There is relaxation in eligibility criteria, and interest rates are about 0.15% lower.
  • A lower stamp duty is charged if the property is registered in a woman’s name. The exemption varies from 1% to 2% across states. For example, the Maharashtra government offers 1% concession on prevailing stamp duty rates to women buyers, while the Delhi government offers them a 2% concession. States like Uttar Pradesh, Rajasthan, Punjab and Haryana also offer a reduction of 1% to 2% on stamp duty, if the house is registered in the name of a woman.
  • To avail of certain tax benefits, a woman can become a joint owner. If she has a separate source of income, she can also claim tax deduction individually.
  • Credit-linked subsidy scheme (CLSS) allows interest subsidy for women from Rs 2.35 lakh to Rs 2.67 lakh, depending on their economic category.

These schemes are aimed at helping women become homeowners, especially single working women and widows. At a glance, the difference in interest rates might appear negligible. However, the savings can be substantial over a 20-year or 30-year loan period.